Are the "Glory Days" over for airline pilots?

David Jones, Consulting Editor

Are the "glory days" finally over for airline pilots? I mean permanently. Forget the cyclical nature of the industry. Are the days of $250,000 captain salaries, labor-friendlywork rules and good pensions really a thing of the past? I recently asked myself this question after a particularly brutal week of reading stories of the doom, gloom and despair that has dominated aviation news the past few years.

First you have to determine to whom the question is asked. It's all about perspective, and perspective is all about timing and, perhaps more importantly, luck. Ask a recently retired American Airlines captain who hired on at a young age with low time during the "pilot shortage" days of the 1960s, managed to always have a seniority number low enough to avoid furlough, and retired with a $2 million lump-sum pension, and his answer will be different from the guy who has worked for a half-dozen airlines, experiencing furloughs, bankruptcies (personal and professional), shutdowns and heartbreaks. Sure, there are pilots who get a major airline seniority number at age 28, work uninterrupted for 32 years and drive off to their retirement beach house (in a 7-series BMW or Convertible Corvette, take your pick). But there are many more who scoff at the "glory days" notion, for, while the airline industry put food on the table, the lifestyle they can maintain after retirement is more modest.

The truth is, I'm not sure there ever was, or ever will be, true glory days. Sure, Southwest has experienced a great run of more than 30 years without so much a single pilot furlough. Many of their senior pilots have accumulated wealth--at least on paper--from the company's stock performance over the years. Aside from Southwest, the major passenger airlines have had a tough run recently. One of the fundamental problems with the airline industry is that today's leader can be tomorrow's bankruptcy case. It wasn't that long ago that Eastern and Pan Am were major pilot employers. Now, they're found only in the aviation history books. I distinctly remember talking to a pilot about six or seven years ago who chose United over Southwest because Southwest was "too small," while United was a global leader with a defined benefit pension plan. Now the former is profitable while the latter is operating under bankruptcy protection. It's a foregone conclusion that United's pension plan will be eliminated. Still, which was the better choice? He may not know until he's 60.

To the pilot who left US Airways, with a lump-sum pension payment, right before that carrier's fiscal collapse, he counts his blessings. To those who are furloughed, they may wonder if they will ever get a taste of the glory days.

Every industry downturn produces pessimists who think the career has been permanently decimated, and pitches the doom and gloom to all that will listen. Just as it is short-sighted to believe the expansion will never end ("I should make captain in five years"), it is ridiculous to assume the end of airline piloting as a good, if not outstanding, career choice. As Louis Smith, now president of FLTops.com, told me about 12 years ago during a particularly difficult period in the industry, "The time to be optimistic is during the downturn. The time to worry is during the expansion cycle because you know what comes next." What comes up, must come down.

So, are the glory days over? Let's look at both sides. The pessimists who say the industry won't recover ("they're all going out of business") point to the fact that today's concessionary contracts don't have snap-back provisions. And the airlines that have historically weathered the temporary down cycles are struggling. Take Delta, for example. It is an airline that avoided pilot furloughs until the early 1990s, and people subsequently wanted then-CEO Ron Allen's head on a platter. Delta's employees were family, it was a profitable airline and one that was managed to avoid the "hire-and-furlough" cycles that plagued other carriers. This time around, Delta has taken its lumps like the other carriers. Allen's restructuring seems minor by comparison.

The optimists look at freight carriers--a senior B-767 captain at ABX Air makes $229 per flight hour (not including overtime)--as proof of a positive correlation between profits and pilot wages.  Although the past few years--not to mention the bankruptcy process--has decimated pension plans, some carriers still have them. We'll see what happens to pilot retirement at Delta once the carrier returns to solid profitability. The optimists also point out that, unlike the downturns of the 1980s and early 1990s, no major carrier has ceased operations. And, although they may prove me wrong, every down cycle is historically followed by an expansion, pilot hiring, a return to profitability, and, a new labor contract that reflects the pilots' contributions to the airline's success.

Are the days of $250,000 captain salaries, labor-friendly work rules and good pensions really a thing of the past? There's no question that they are on hold, but major airlines still are--and will continue to be--employers of choice. Pay rates will rebound and will reflect the financial condition of each carrier. Work rules will change with the wind. And although pensions could be structured substantially different in the future, they will continue to be a part of the total compensation package offered by the large carriers.

In Utopia, the stock market is always at an all-time high the day you need to cash out, and the low points are always when you're buying, not selling. Although a select few enjoy a 30-year career without a little turbulence, that is not the norm. The glory days for an airline pilot are something best left for Ricardo Montelbon to pitch to the networks for a remake of "Fantasy Island." All a pilot can do is to get a seniority number, and hold on for dear life. It's going to be a bumpy ride.